Forex Trading Class 1 serves as the foundation for any beginner seeking to understand how currency trading works. This first lesson introduces the forex market, how it operates, key terminology, and essential concepts that every new trader must master before executing a live trade.

Key Takeaways

• Forex trading involves buying one currency and selling another simultaneously
• The forex market is decentralised and open 24 hours, 5 days a week
• The most traded currencies are USD, EUR, JPY, GBP, and AUD
• Currencies are quoted in pairs such as EUR/USD or GBP/JPY
• Understanding pips, lots, leverage, and spreads is critical for risk control

What Is Forex Trading?

Forex (foreign exchange) trading is the act of exchanging one currency for another with the aim of profiting from exchange rate movements. Unlike the stock market, forex is traded over-the-counter — meaning directly between parties, typically through brokers.

Daily global forex volume exceeds $7 trillion, making it the largest and most liquid market in the world.

Understanding Currency Pairs

Currencies are always traded in pairs:

• Base currency: the first in the pair
• Quote currency: the second

Example: In EUR/USD

• EUR = base
• USD = quote
• If EUR/USD = 1.1000, one euro buys 1.10 dollars

Types of pairs:

• Major pairs: EUR/USD, GBP/USD, USD/JPY
• Cross pairs: EUR/GBP, AUD/JPY
• Exotic pairs: USD/TRY, EUR/SGD

What Moves Forex Prices?

Forex prices fluctuate based on:

• Interest rate differentials
• Inflation data
• Economic growth
• Geopolitical risk
• Central bank policy
• Market sentiment

Basic Forex Terms

• Pip: Smallest price movement (0.0001 for most pairs)
• Lot: Standard trade size (1 lot = 100,000 units)
• Leverage: Borrowing funds to control a larger trade
• Spread: Difference between bid and ask price

Real-World Example

Suppose you believe the euro will strengthen against the dollar. You buy EUR/USD at 1.1000. Later, it rises to 1.1050:

• Gain = 50 pips
• If you traded 1 lot, that’s $500 profit (1 pip = $10 on standard lot)

Risk Management Introduction

One of the most important lessons in Class 1 is to never trade without a stop loss. Effective risk control ensures that a single trade doesn’t wipe out your capital.

Key points:

• Risk no more than 1–2% of account per trade
• Use demo accounts before going live
• Avoid emotional decision-making

Start With Professional Education

To master forex trading, structured education is essential. Explore our expert-led Forex Course to develop your skills step-by-step with real market examples, chart analysis, and live mentoring.

Frequently Asked Questions

What is the best way to start forex trading as a beginner?

Start with a demo account, study the basics, and complete a structured forex course before using real money.

How much money do I need to start trading forex?

Some brokers allow accounts from $10, but serious trading typically requires at least $100–$500 for proper risk management.

Is forex trading legal in the UK?

Yes. The UK forex market is regulated by the Financial Conduct Authority (FCA), and traders can legally use FCA-licensed brokers.

What time can I trade forex?

The market is open 24 hours a day, from Sunday 10 PM GMT to Friday 10 PM GMT, covering four major sessions globally.

What is leverage in forex?

Leverage allows you to control a large trade with a small amount of capital. For example, 1:30 leverage means £1 controls £30 in the market.

Conclusion

Class 1 of your forex trading journey lays the groundwork for understanding how the market functions. Grasping the mechanics of currency pairs, price movements, terminology, and risk is critical before moving to more advanced strategies. Continue to the next lesson equipped with knowledge, caution, and the right mindset for trading success.